Demand for cobalt driven by its use in electric vehicles (EV) has increased on the back of rising EV sales, with a 40% year on year increase in such sales in 2019. This means that the increasing momentum in achieving transparency in global EV supply chains is paramount at a time when global cobalt demand continues to grow.
This is the view of Indigo Ellis, associate director of Africa-focused consultancy Africa Matters, who spoke during a panel discussion titled: ‘Fitting into a new world: Transparency takes centre stage’ at DRC Mining Week Online on June 15.
The Democratic Republic of Congo (DRC), which is the world’s largest producer of mined cobalt, is facing increased pressure to ensure that its artisanal and small scale mining (ASM) sector, which accounts for 15% – 20% of the country’s cobalt production, produces in a responsible and transparent manner.
Taking prior ASM cobalt formalisation learnings forward
Also speaking on the panel, James Nicholson, head of corporate responsibility at independent commodity trader Trafigura, which has experience in formalising ASM cobalt in the DRC, said that one of Trafigura’s learnings from a pilot project it was involved in is that “very straightforward and targeted interventions can have a big impact.”
Between 2018 and 2020, Trafigura was involved in formalising ASM cobalt in the DRC through its partnership with mining and processing company Chemaf at the Mutoshi ASM formalisation pilot project, where together with NGO Pact, the partners successfully ran a responsible cobalt sourcing programme that yielded social and economic benefits for the diggers themselves, as well as their families and communities.
Nicholson says that some of the achievements at that particular project included zero fatalities, no lost time injuries for a considerable number of man hours worked, women working comfortably on site when previously they would have been chased off, as well as creating a safe and healthy environment to which people returned because they knew they were going to be looked after and knew they would go home safely at the end of every day.
Ramping up the formalisation of DRC’s artisanal cobalt mining sector
Trafigura entered into a partnership with state-owned Entreprise Générale du Cobalt (EGC) in November 2020, to support the commercialisation of responsibly sourced artisanal cobalt in the DRC.
EGC was established by government decree in 2019 to purchase, process and sell 100% of the cobalt that is produced by artisanal miners or companies involved in artisanal and small-scale mining in the DRC.
Nicholson explains that the establishment of EGC was a targeted intervention by the DRC government for the country to benefit from the intrinsic value of cobalt, currently being boosted by the development of carbon-free energies. In light of this, it was essential that measures be taken to support the formalisation of this industry and underpin confidence in EGC cobalt, ensuring that a number of necessary documented controls are in place.
These controls are based on the EGC Responsible Sourcing Standard, which was launched March 31 and will underpin respect for human rights, market confidence and support a safe and just commodities transition, explains Nicholson.
The Responsible Sourcing Standard aligns with DRC law and provides a baseline for the market, ensuring that ECG cobalt can be accepted into the legitimate cobalt value chain alongside cobalt of any origin, Nicholson says.
EGC Responsible Sourcing Standard in practice
While there is one EGC site in development at the moment, expected to be launched in July or August, the EGC standard applies to all ASM sites, says Nicholson, with plans to extend this to between 10 to 20 other sites in future.
To ensure that the standard is met, it will be upheld by EGC and Pact staff which will be present on each EGC production site. Production will be bagged and tagged, followed by electronic payment for the cobalt.
The data captured throughout the supply chain will be uploaded to a blockchain platform, and will therefore be traceable from mine to market on the blockchain platform, explains Nicholson, noting that an independent responsible sourcing assessor (Kumi Consulting) has been appointed to conduct quarterly site assessments against the standard, which will be made available to the downstream customers of Trafigura.
Implementing a solution at source is the best way forward
Dr Dorothee Baumann-Pauly, director at the Geneva Centre for Business and Human Rights explains that all the centre’s research on global supply chains points to the chain being only as strong as its weakest link.
“In the cobalt supply chain, the greatest human rights risks lie in the deepest layers of the supply chain down at the artisanal miners level,” says Baumann-Pauly, noting that the reality of ASM cobalt in the DRC is that it finds its way into the large scale mining (LSM) supply chain and that sourcing exclusively from large scale mining sites, as some companies claim to do, is “wishful thinking,” she says.
Because distinguishing between LSM and ASM cobalt supply is just not impossible in the DRC context, due to the nature of the business environment with a number of points in which ASM cobalt can be mixed in with LSM cobalt, Baumann-Pauly says that solutions to the human rights risks in the ASM sector need to be found at the source.
Having visited two ASM cobalt formalisation projects in the DRC in September 2019, Baumann-Pauly noticed that formalisation may mean different things to different people and therefore emphasises the importance of a standard for responsible ASM cobalt from the DRC, which defines what formalisation means, what good looks like and what responsible ASM cobalt should contain.
The launch of the EGC Responsible Sourcing standard was therefore a very important milestone to Baumann-Pauly as it felt like research recommendations were being put into practice, she says, noting that the standard is a positive development in that it allows tried and tested ASM formalisation standards to be scaled up and replicated at a number of different sites.